Businessman Dave King has been dealt a blow in his long running battle with the South African Revenue Service.
On Thursday Sars won a judgement to have the transfer of assets from a company associated with King, known as Ben Nevis, to another, Metlika, in what the court ruled was an attempt to avoid its tax liability.
King has long maintained that he and Ben Nevis are wholly separate entities and that he is not the owner, or direct beneficiary of the wealth stowed away in Ben Nevis.
But Sars has maintained through a complicated series of companies and offshore trusts, that King is the ultimate boss of Ben Nevis.
The assets are the gains from a series of share sales in a company that King listed on the JSE in 1997, known as Special Outsourcing Limited (SOL). The sell-out earned King over a billion rand in profits, as well as the ire of other shareholders when the share price tanked when the news of the sales leaked out.
According to Sars, Ben Nevis currently owes its purse R1,3-billion, and King himself, based on his lavish lifestyle, is liable for another R900-million.
Thursday’s judgement however could see about R400-million of this debt paid off, through Sars claims to Ben Nevis assets which include King’s Sandhurst home, two holiday homes in Knysna and Plettenburg Bay, and a wine farm in the Western Cape.
In the court judgement it describes how the Bermuda Trust, administered Ben Nevis as well as another vehicle the Caledonian trust — which has as its discretionary beneficiaries, King’s mother and his immediate family.
King has always maintained that this was legitimate tax structuring, rather than a convoluted web to avoid the taxman.
The court found that in 2001 when Sars notified King that Ben Nevis was to be investigated — the move was made to begin transferring assets to a newly created entity — Metlika.
It determined that in the light of emails in 2001 between, Steve Bourgourd, senior trust officer at the Bank of Bermuda and his colleague Adrian Fairbourn, who were at the time seeking King’s business, the transfer of assets was an attempt to evade the tax man.
One email quoted in the judgement stated that “we are restructuring Ben Nevis, to stop the South Africa taxman in his tracks … What we are doing is selling all investments in the name of Ben Nevis … as investments are sold they are transferred back up to the Glencoe Trust [another King trust company] and transferred back to a subsidiary company Metlika, this making a clean break in Ben Nevis.”
This however is not the final word in the battle between Sars and King.
King is also the subject of a criminal case after he is alleged to have procured a fraudulent settlement of the ongoing tax matters, and influence a former senior Sars employee named Leonard Radebe.
In 2008 the Mail & Guardian reported on the links between Rabebe and Glenn Agliotti, the murder accused in the Brett Kebble case, and how known associates of Aggliotti introduced King to Radebe.
King claims, however that he was offered a legitimate settlement by Sars, to finalise matters for R300-million, which the tax authorities reneged on.
Radebe at the time maintained his innocence and said he was in no way involved in the fixed settlement.
The case is currently with the South African Police Service, though its progress is unclear.
A separate appeal in the tax case against Ben Nevis, is also ongoing and due to continue in court next week.
It is expected that King will appeal the case. He was however not immediately available for comment on Friday morning.